Wednesday, August 20, 2014

Today the entire Elliott wave update seen at http://ewaveanalytics.com is available below. If you like what you see, please take advantage of our free 1-week trial and enjoy the views of others and a consensus opinion. If you followed our trading advice, you would have made more money over the past few weeks than you would have from simply holding long or short.

The market's rally to a near new all-time high has caused some of the wave counts using an impulse in the wave 4 to 2014 [iii] position to move to as good of a standing as the wave count above in color. As mentioned many times in the past, this wave does not count well as an impulse due to the size disparity between [ii] and ii of (i). These two correction are 2nd and 4th waves, respectively, within the same impulse if there is an impulse from 4 to 2014 [iii]. The reason for the change is due to the fact that the size of [4] if underway seems a bit small relative to [2].

If there is an impulse from 4 to 2014 [iii], there is nothing wrong with an impulse from 2013 [iv] to (3). With this there can be an impulse from 2 to (3) and a larger one from (2) to [3]. This implies a sideways 4th wave underway or complete beginning at [3] that is paired with 2nd wave (2). This is basically the same action expected if an impulse is underway since 2014 [iv]. This is expected if there is an impulse higher from 4 to 2014 [iii] and an impulse from 2 to 3 where (2) to 2014 [iii] forms a larger impulse. Then (2) is the 2nd wave paired with 4th wave from [iii] to [iv] and (1) is the 1st wave paired with an impulse underway since [iv].

Other possibilities than the two discussed in the above paragraph or the one in color introduce undesired features outweighing any improvements made so are therefore weak. For example an impulse higher with the core within wave 5 no longer uses 4 to 2014 [iii] as an impulse but goes against the natural features in the chart; the wide open non-overlapping area in 2013 and momentum gain through that time that are typical for 3rd waves. Similar is a 3rd wave impulse from (2) to 2013 [i] which requires a huge move after 2013 [ii] relative to (1) that would be 5th and 1st waves, respectively.

The wave count in color uses a structure that is better than the two good options discussed above during the [2] to [3] time frame. There is no sense in throwing it out because the correction underway can expand in price territory as it goes. For example wave (4) did this. But generally, wave 'a' of a correction is making a statement about how large the correction will end up being.

On the above scale notice that the sideways correction underway from the 2014 [iii] high has been eliminated. Also a triangle during 2010-1 has only a weak chance due to the difficulty finding an impulse higher since (2) that is incomplete; now something undesirable in addition to an impulse from 4 to 2014 [iii] is required.

The sell-off from the last all-time high is now almost certainly a double zigzag. If a correction is still underway since (5), the wave higher since A must eventually prove to be a corrective wave. This can be B of [4], wave 'b' of a sideways pattern from (5) like a flat, 'a' of a zigzag or flat, etc. So many things are possible here so it is important to keep an open mind.

When considering the structure higher since A, a double zigzag or impulse wave come to mind first. The impulse wave would have its core within the (a) of [y] position and can be wave 'a' of a larger zigzag-family pattern. A triple zigzag is also possible and works reasonably well with the structure of the legs higher, but these patterns are quite rare. Only this pattern allows for a complete rally at today's high or a bit higher.

The chart above outlines what the zigzag legs look like if the triple zigzag option is true.

The biggest question in the short term is what is the structure after [x]. At first it seems like [1] is the core, but it is so early on in the wave that [3] could be the core which is well-centered in time even though it is smaller than [1] in price. Then there is a question about [1] being 1 or 2 impulse waves meaning that ii to [3] can be an impulse or [1] alone can be an impulse. These characteristics give rise to a vast amount of possibilities.

The important thing to notice here is that the wave higher since [x], a zigzag or impulse, is losing momentum as can be seen through the wave overlap. In addition, the prospect for a zigzag higher since [x] is not good due to the possible locations of 'b'; all suggest very disproportionate 'a' and 'c' waves. Putting everything together, upside looks very limited in the short-term before a small pullback begins that should be about the same size as [x] and (b) although likely more shallow.

Final Analysis:

In the short-term, a rally into the mid-1990s at highest is expected before a small pullback ensues. The upper 1970s may be the lowest price reaches before the rally continues. Getting under 1969 will be signal that a triple zigzag higher since A has completed and the market is heading down to test this month's low.

New all-time highs are expected where an impulse or corrective wave higher is underway since A. If not an impulse, there are many possibilities to describe action since [3].

The longer-term possibilities now suggest an additional 5-wave advance since A is underway or a sideways correction since [3] is in its early stages of developing. If there is a sideways pattern underway, the rally taking place since A can blow above the last all-time high without invalidating the pattern. In fact a widening of the wave is expected so proportionality is found with wave [2].

A triangle from 2010-1 likely did not unfold. It is most likely that an impulse higher is underway since [IV] in 2009, although it cannot yet be ruled out that a sideways pattern from i to [2] is a 'b' wave or that there is a double zigzag higher unfolding.

Today the entire Elliott wave update seen at http://ewaveanalytics.com is available below. If you like what you see, please take advantage of our free 1-week trial and enjoy the views of others and a consensus opinion. If you followed our trading advice, you would have made more money over the past few weeks than you would have from simply holding long or short.

The market's rally to a near new all-time high has caused some of the wave counts using an impulse in the wave 4 to 2014 [iii] position to move to as good of a standing as the wave count above in color. As mentioned many times in the past, this wave does not count well as an impulse due to the size disparity between [ii] and ii of (i). These two correction are 2nd and 4th waves, respectively, within the same impulse if there is an impulse from 4 to 2014 [iii]. The reason for the change is due to the fact that the size of [4] if underway seems a bit small relative to [2].

If there is an impulse from 4 to 2014 [iii], there is nothing wrong with an impulse from 2013 [iv] to (3). With this there can be an impulse from 2 to (3) and a larger one from (2) to [3]. This implies a sideways 4th wave underway or complete beginning at [3] that is paired with 2nd wave (2). This is basically the same action expected if an impulse is underway since 2014 [iv]. This is expected if there is an impulse higher from 4 to 2014 [iii] and an impulse from 2 to 3 where (2) to 2014 [iii] forms a larger impulse. Then (2) is the 2nd wave paired with 4th wave from [iii] to [iv] and (1) is the 1st wave paired with an impulse underway since [iv].

Other possibilities than the two discussed in the above paragraph or the one in color introduce undesired features outweighing any improvements made so are therefore weak. For example an impulse higher with the core within wave 5 no longer uses 4 to 2014 [iii] as an impulse but goes against the natural features in the chart; the wide open non-overlapping area in 2013 and momentum gain through that time that are typical for 3rd waves. Similar is a 3rd wave impulse from (2) to 2013 [i] which requires a huge move after 2013 [ii] relative to (1) that would be 5th and 1st waves, respectively.

The wave count in color uses a structure that is better than the two good options discussed above during the [2] to [3] time frame. There is no sense in throwing it out because the correction underway can expand in price territory as it goes. For example wave (4) did this. But generally, wave 'a' of a correction is making a statement about how large the correction will end up being.

On the above scale notice that the sideways correction underway from the 2014 [iii] high has been eliminated. Also a triangle during 2010-1 has only a weak chance due to the difficulty finding an impulse higher since (2) that is incomplete; now something undesirable in addition to an impulse from 4 to 2014 [iii] is required.

The sell-off from the last all-time high is now almost certainly a double zigzag. If a correction is still underway since (5), the wave higher since A must eventually prove to be a corrective wave. This can be B of [4], wave 'b' of a sideways pattern from (5) like a flat, 'a' of a zigzag or flat, etc. So many things are possible here so it is important to keep an open mind.

When considering the structure higher since A, a double zigzag or impulse wave come to mind first. The impulse wave would have its core within the (a) of [y] position and can be wave 'a' of a larger zigzag-family pattern. A triple zigzag is also possible and works reasonably well with the structure of the legs higher, but these patterns are quite rare. Only this pattern allows for a complete rally at today's high or a bit higher.

The chart above outlines what the zigzag legs look like if the triple zigzag option is true.

The biggest question in the short term is what is the structure after [x]. At first it seems like [1] is the core, but it is so early on in the wave that [3] could be the core which is well-centered in time even though it is smaller than [1] in price. Then there is a question about [1] being 1 or 2 impulse waves meaning that ii to [3] can be an impulse or [1] alone can be an impulse. These characteristics give rise to a vast amount of possibilities.

The important thing to notice here is that the wave higher since [x], a zigzag or impulse, is losing momentum as can be seen through the wave overlap. In addition, the prospect for a zigzag higher since [x] is not good due to the possible locations of 'b'; all suggest very disproportionate 'a' and 'c' waves. Putting everything together, upside looks very limited in the short-term before a small pullback begins that should be about the same size as [x] and (b) although likely more shallow.

Final Analysis:

In the short-term, a rally into the mid-1990s at highest is expected before a small pullback ensues. The upper 1970s may be the lowest price reaches before the rally continues. Getting under 1969 will be signal that a triple zigzag higher since A has completed and the market is heading down to test this month's low.

New all-time highs are expected where an impulse or corrective wave higher is underway since A. If not an impulse, there are many possibilities to describe action since [3].

The longer-term possibilities now suggest an additional 5-wave advance since A is underway or a sideways correction since [3] is in its early stages of developing. If there is a sideways pattern underway, the rally taking place since A can blow above the last all-time high without invalidating the pattern. In fact a widening of the wave is expected so proportionality is found with wave [2].

A triangle from 2010-1 likely did not unfold. It is most likely that an impulse higher is underway since [IV] in 2009, although it cannot yet be ruled out that a sideways pattern from i to [2] is a 'b' wave or that there is a double zigzag higher unfolding.

My trading philosophy is 95% based on my own Elliott Wave analysis of the S&P 500. I try to keep my analysis and trading as simple as possible and do not use trend lines, channels, or definite retracement, price, or time targets. To me, inspecting the proportionality and symmetry of a market's price structure is the key to mastering the principle; it is through this that low-risk, high-reward trading opportunities are found.

Because they are the only things I look at when trading, the quality of the charts I post on this blog are very important to me. I think you will find my work to be the best Elliott Wave analysis of the S&P 500 on the internet.